RBI penalises 12 banks including ICICI Bank for violating rules
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The Reserve Bank of India (RBI) has fined 12 banks, includingICICI Bank, Axis Bank, Canara Bank and Corporation Bank, a total of Rs 1.5 crore in relation to the Deccan Chronicle Holdings Ltd (DCHL) loan default case. This fine has been levied as a result of not following proper procedures while lending to DCHL.
"After considering the facts of each case and the individual bank's reply, as also, personal submissions etc., by some of the banks before its Committee of Executive Directors, the Reserve Bank came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty as determined above," RBI said.
The banks collectively had a total exposure of around Rs 4,000 crore.
ICICI Bank, the second largest lender of the country, has been slapped with a fine of Rs 40 lakh, the highest penalty in this case. The remaining 11 banks have been fined between Rs 5 lakh and Rs 15 lakh.
"RBI had been communicating with the banks for a while now, seeking clarity on the know your customer (KYC) procedure and due-diligence with regard to lending to DCHL. The central bank had been trying to ascertain what was lax on the bank's part in this case," said a senior official from a bank fined by RBI.
RBI had issued showcause notices to these 12 banks in March 2014 and the banks had then submitted written replies.
"This action is not intended to pronounce upon the validity of any transaction or agreement entered into between the bank concerned and the borrower," the notification added.
A forensic audit conducted by Canara Bank had revealed owners of DCHL had taken loans by mortgaging the same property with multiple lenders. This was conducted after the media firm had started defaulting on the loans to the lenders.
Based on a complaint by Canara Bank, the Central Bureau of Investigation had also filed a case against T Venkattram Reddy, chairman of DCHL, for criminal conspiracy, cheating and forgery. PTI
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